The Powerball jackpot has risen to a total of $1.3 billion since there has been no winner so far. There are possibilities for big potential liabilities as these astounding numbers are most likely to attract.
On the other hand however the downside of course is the taxes on the winning rickets. However even with paying up the taxes there is expectation among winners that they will end up with a lot.
However past experience has shown that even after paying the taxman winners cannot be sure of laying hands on the entire of the due to potential claims of a share of the loot from friends, family or co-workers.
Often based on an alleged oral agreement, such incidents happen more often than one might think. There is often misinterpretation arising from an innocent remark about splitting the winnings. Added to this is the expenses towards the inevitable fees of lawyers which need to be incurred for defending against the claims.
However taxes can hit on such legal settlements in surprising ways even as most such cases get settled. Winners can be taken for as targets even if the jackpots do not necessarily run into the hundreds of millions for winners.
For example, a lawsuit had to be faced by a 53-year-old California woman by the liquor store owner who sold her the winning ticket after the woman found out she had won $1 million.
The owner of the liquor store from where Eva Reyes had bought the ticket sued her even though the woman was the winner. Ms. Reyes had bought the ticket from the USA Liquors in Milpitas, California owned by Laxmi Bhardwaj.
According to the store owner, there was a verbal obligation given by Ms. Reyes that the winning money would be split into two - $350,000 each after taxes as she had fronted the money to buy the tickets.
A signed note that guaranteed him half the winnings was claimed ot be in the possession of the plaintiff. But Ms. Reyes claims the deal was for $50,000, not half.
The top tax for lottery winning as decided by the IRS is at 39.6 %. But the tax withholding rate on lottery winnings is only 25%. There can be some trouble for some winners when they file for the prize money related to paying their taxes. There are even local and state taxes apart from federal taxes. Most states take a sizeable chunk of the prize money.
Despite the result from the lawsuits can be devastating on the winners. One of the reasons for this is that the money can be tied up for years due to the long drawn law suits of claims by co-workers, former spouses and others who say they deserve a share that can run up to years. Hence while buying a lottery ticket one needs to be careful about what one says and to whom.
A 20 year old oral agreement related to the splitting up of lottery winnings was upheld in court in a recent case.
However not every case is related to friends or co-workers, disputes with family members can be even worse. For example an Alabama Waffle House waitress won a $10 million lottery jackpot on a ticket given to her by a customer in the case of Dickerson v. Commissioner.
The winner was slammed with gift tax when she tried to benefit her family and spread the wealth.
(Source:www.forbes.com)
(Source:www.forbes.com)
On the other hand however the downside of course is the taxes on the winning rickets. However even with paying up the taxes there is expectation among winners that they will end up with a lot.
However past experience has shown that even after paying the taxman winners cannot be sure of laying hands on the entire of the due to potential claims of a share of the loot from friends, family or co-workers.
Often based on an alleged oral agreement, such incidents happen more often than one might think. There is often misinterpretation arising from an innocent remark about splitting the winnings. Added to this is the expenses towards the inevitable fees of lawyers which need to be incurred for defending against the claims.
However taxes can hit on such legal settlements in surprising ways even as most such cases get settled. Winners can be taken for as targets even if the jackpots do not necessarily run into the hundreds of millions for winners.
For example, a lawsuit had to be faced by a 53-year-old California woman by the liquor store owner who sold her the winning ticket after the woman found out she had won $1 million.
The owner of the liquor store from where Eva Reyes had bought the ticket sued her even though the woman was the winner. Ms. Reyes had bought the ticket from the USA Liquors in Milpitas, California owned by Laxmi Bhardwaj.
According to the store owner, there was a verbal obligation given by Ms. Reyes that the winning money would be split into two - $350,000 each after taxes as she had fronted the money to buy the tickets.
A signed note that guaranteed him half the winnings was claimed ot be in the possession of the plaintiff. But Ms. Reyes claims the deal was for $50,000, not half.
The top tax for lottery winning as decided by the IRS is at 39.6 %. But the tax withholding rate on lottery winnings is only 25%. There can be some trouble for some winners when they file for the prize money related to paying their taxes. There are even local and state taxes apart from federal taxes. Most states take a sizeable chunk of the prize money.
Despite the result from the lawsuits can be devastating on the winners. One of the reasons for this is that the money can be tied up for years due to the long drawn law suits of claims by co-workers, former spouses and others who say they deserve a share that can run up to years. Hence while buying a lottery ticket one needs to be careful about what one says and to whom.
A 20 year old oral agreement related to the splitting up of lottery winnings was upheld in court in a recent case.
However not every case is related to friends or co-workers, disputes with family members can be even worse. For example an Alabama Waffle House waitress won a $10 million lottery jackpot on a ticket given to her by a customer in the case of Dickerson v. Commissioner.
The winner was slammed with gift tax when she tried to benefit her family and spread the wealth.
(Source:www.forbes.com)
(Source:www.forbes.com)
